USD/INR: Rupee Opens Weaker Amid Oil Volatility and FPI Outflows

The Indian rupee opened lower against the US dollar on Wednesday, March 11, as volatility in global crude oil prices and continued foreign investor outflows from domestic equities weighed on the currency.

The rupee began trading at 91.94 per dollar, down 0.14% from its previous close of 91.81, according to market data.

Oil Price Swings Keep Currency Sensitive

Currency traders said the local unit remains highly sensitive to fluctuations in crude oil prices and foreign portfolio flows. While the recent pullback in oil prices has offered some relief, uncertainty surrounding the conflict involving Iran continues to cloud the outlook.

Any sustained recovery in the rupee could remain limited if geopolitical tensions persist and foreign investors continue reducing exposure to Indian markets.

Crude Retreat Eases Some Pressure

Brent crude has eased to around $88 per barrel, after briefly surging close to $120 during the peak of concerns about supply disruptions linked to the Iran conflict. The decline has helped ease some pressure on the rupee, as India relies heavily on imported crude oil and rising prices typically widen the country’s trade deficit.

The recent correction in oil prices has been driven by hopes of a possible de-escalation in the conflict, expectations that the Group of Seven (G7) nations could release strategic oil reserves, and shifting developments around shipping routes through the Strait of Hormuz.

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Persistent FPI Selling Weighs on Rupee

Despite the easing in oil prices, pressure on the rupee remains due to sustained selling by foreign investors. Overseas portfolio investors have withdrawn nearly $4 billion from Indian equities so far this month, adding to downward pressure on the currency.

Market participants expect the rupee to remain volatile in the near term. Key factors that will influence the currency’s direction include crude oil price movements, foreign portfolio flows, and any intervention by the Reserve Bank of India.

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